ADVFN Morning London Market Report: Wednesday 27 January 2021

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London open: Stocks tread water ahead of US tech earnings, Fed


London stocks were treading water in early trade on Wednesday amid ongoing worries about the pandemic, as investors eyed earnings from US technology giants and the latest policy announcement from the Federal Reserve.

At 0840 GMT, the FTSE 100 was down just 0.1% at 6,649.31.

Spreadex analyst Connor Campbell said: “Wednesday is pretty stuffed, with the first Fed meeting of 2021, and earnings from AppleFacebook and Tesla.

“Sadly for the European markets, all of that happens after the market has closed, meaning a frustratingly mixed session might be on the cards.

“Alongside the hum of Covid-19 lockdown anxiety that has plagued the FTSE since the third set of restrictions were put in place, the index’s biggest issue is the pound. Thanks to US stimulus speculation, cable is at its best level for close to 33-months, trading above $1.374. Against the euro, meanwhile, a 0.2% increase this Tuesday has lifted sterling to an eight-and-a-half month peak of €1.1304, the single currency harmed by vaccine supply troubles on the continent.”

The Fed announcement is due after the European close. Investors will be on the lookout for any signs the central bank is going to start reducing its current support now that the Biden administration is in power and a fat stimulus package should be coming down the pipeline, Campbell said.

In equity markets, precious metals miner Fresnillo lost its shine after it lowered its current-year gold output forecast as a landslip at its Noche Buena mine and Covid restrictions hit 2020 production. The company, which operates seven mines in Mexico, reported a 12.1% fall in 2020 gold production to 769,618 ounces, at the upper end of revised estimates provided in October.

Miners were weaker generally, with Rio TintoAntofagastaBHPGlencore and Anglo American all trading down.

Defence contractor Babcock slumped after a downgrade to ‘underweight’ from ‘overweight’ at Barclays, which said a capital raise was likely.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Pearson Plc +9.59% +73.00 834.40
2 Centrica Plc +3.97% +1.96 51.30
3 British Land Company Plc +3.47% +15.30 456.50
4 Sainsbury (j) Plc +3.06% +7.70 259.00
5 Hargreaves Lansdown Plc +2.85% +48.00 1,730.00
6 Tesco Plc +2.05% +5.00 248.40
7 Morrison (wm) Supermarkets Plc +1.98% +3.65 188.15
8 Micro Focus International Plc +1.96% +7.90 411.80
9 Land Securities Group Plc +1.75% +10.90 632.90
10 Next Plc +1.65% +130.00 8,010.00


Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Fresnillo Plc -4.00% -42.50 1,020.00
2 Berkeley Group Holdings (the) Plc -2.50% -111.00 4,324.00
3 Glencore Plc -2.43% -6.20 248.80
4 Melrose Industries Plc -2.33% -3.90 163.20
5 Crh Plc -2.17% -68.00 3,063.00
6 Persimmon Plc -2.17% -58.00 2,618.00
7 Barclays Plc -2.07% -2.88 136.56
8 Bhp Group Plc -2.02% -42.50 2,066.00
9 Anglo American Plc -1.99% -50.00 2,460.50
10 Kingfisher Plc -1.97% -5.40 268.20


Europe open: Shares lower as investors sit tight ahead of Fed meeting

European shares opened slightly lower on Wednesday as investors held fire ahead of a US Federal Reserve decision on policy later in the day.

The pan-European Stoxx 600 index was down 0.05% in early trade with major bourses looking for direction. The French CAC 40 was up 0.33% on the back of strong results from luxury group LVMH.

Germany’s DAX was down 0.33% as German consumer sentiment plummeted; hitting -15.6 against the -7.8 forecast as extending a stricter lockdown to contain the coronavirus pandemic put a halt to shopping.

Investors were also eyeing a bumper day of US corporate earnings from AppleFacebook and Tesla.

In equity news, Danish medical equipment maker Ambu led the gainers after the company reported a 39% rise in first quarter revenue. The shares rose 14.78% on the news.

Evotec shares rose after the US Department of Defence had awarded the German drug maker a $28.6m contract to produce monoclonal antibodies for use in the development of a treatment for Covid-19.

LVMH rose as booming sales at fashion brands like Louis Vuitton, particularly in China, helped to cushion the impact of the coronavirus pandemic.


US close: Stocks close lower as earnings seasons kicks off

Wall Street stocks closed lower on Tuesday amid a busy day for corporate earnings.

At the close, the Dow Jones Industrial Average was down 0.07% at 30,937.04, while the S&P 500 was 0.15% softer at 3,849.602 and the Nasdaq Composite saw out the session 0.07% weaker at 13,626.06.

The Dow closed 22.96 points lower on Tuesday, extending losses recorded in the previous session.

Tuesday’s main focus was earnings from large companies like General Electric, which moved higher after publishing its quarterly figures, and Johnson & Johnson, which was also in the green after topping expectations.

Verizon also topped earnings expectations and issued some upbeat profit guidance, while tech behemoth Microsoft posted quarterly sales of $40.0bn for the first time ever.

As far as the Covid-19 pandemic was concerned, US health officials and lawmakers cautioned Americans about new strains of the coronavirus after Moderna said its vaccine did provide a certain amount of protection against a variant found in South Africa and Minnesota reported the first confirmed case of a Brazilian strain of the virus in the US.

Also in focus was news that Joe Biden’s stimulus plans appeared to be at risk of being watered down in order to appease lawmakers on the Republican side of the aisle, with the new president stating he was open to narrowing eligibility for the $1,400 stimulus cheques.

The US has now confirmed a total of 25.95m cases of Covid-19, claiming the lives of more than 433,900 Americans in the process.

On the macro front, the International Monetary Fund updated its World Economic Outlook forecasts on Tuesday and said it now expects overall global growth of 5.5%, an upgrade of 0.3% to reflect the rollout of Covid-19 vaccines and economic stimulus packages, while the US was predicted to return to levels last seen at the end of 2019 in the second half of the year.

Elsewhere, surging home prices don’t appear to be slowing down any time too soon, according to the S&P CoreLogic Case-Shiller Home Price Index, driven by high demand and a record low number of homes on the market. Prices nationally rose 9.5% year-on-year in November, the strongest annual growth rate in over six years and a significantly stronger increase than the one recorded a month earlier.

Still on data, US consumer confidence rose in January, according to the Conference Board, which stated its consumer confidence index grew to 89.3, up from December when it fell to 87.1.

Lastly, the Richmond Fed‘s manufacturing index revealed manufacturing activity across the central Atlantic region grew in January but at a slower pace than seen in December as the composite index fell to 14 in January from a print of 19 registered a month earlier.

Outside of earnings, the biggest headline in the corporate space was news that PepsiCo and Beyond Meat had launched a joint venture aimed at making plant-based snacks.


Wednesday newspaper round-up: HSBC, Tim Martin, Arcadia

Gordon Brown has called for emergency measures to support businesses in the budget after new research from the London School of Economics warned almost 1m UK companies were at risk of failure in the next three months. The former prime minister said the report’s finding that one in seven businesses – employing 2.5 million people – might be forced to close by the spring should act as a “clarion call” to Rishi Sunak as he prepares his tax and spending measures for 3 March. – Guardian

HSBC’s chief executive has denied taking a political stance on China’s crackdown in Hong Kong, claiming the bank was not in a position to question police requests when it agreed to freeze accounts of pro-democracy activists. Questioned by MPs on the foreign affairs committee on Tuesday, Noel Quinn ruled out exiting the Hong Kong market in light of Beijing’s controversial new security laws, saying it “would only harm” local customers. – Guardian

Wetherspoons chairman Tim Martin has an extra £50m in his pocket after selling almost 4.4m shares in the pub chain on Tuesday. The share sale has reduced his stake in the FTSE 250 pub operator to just under 21.9pc, down from 25.2pc, worth about £330m. Mr Martin has agreed not to sell any more shares until results for the year to 25 July are released in September, the company said. – Telegraph

Sir Philip Green’s retail empire collapsed under the weight of debts totalling £750m, new filings reveal. Reports prepared by Deloitte, appointed as Arcadia’s administrator at the end of November, reveal the perilous state of the finances of some of the high street’s best-known brands. – Telegraph

Libya’s national oil company is to open a hub in London that will award consultancy and asset management contracts worth hundreds of millions of pounds over the next several years to British companies. The Mayfair office, scheduled to open in March or April depending on pandemic controls, will be the “final gateway for Libyan investment decisions” as the country embarks on an ambitious project to increase oil production to 2.1 million barrels a day, Mustafa Sanalla, chairman of the National Oil Corporation, said. – The Times


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